VLO – Valero Energy Corp – Shares in Valero are in positive territory on Friday, up 0.25% at $34.18 as of the time of this writing. Trading traffic in December expiry options this morning suggests one strategist is positioning for the price of the underlying to increase substantially by year’s end. The stock was cut to ‘perform’ from ‘outperform’ at Oppenheimer today, but was upgraded to ‘buy’ from ‘neutral’ at Citi on Wednesday.
The most traded options contracts on the refiner thus far in the session are the Dec $39 strike calls, with roughly 15,000 contracts exchanged versus open interest of 5,090 contracts. Time and sales data indicates most of the calls were purchased at a premium of $0.38 each. The far out of the money call options may be profitable at December expiration should shares in Valero Energy rally 15% over the current price of $34.18 to exceed the breakeven point at $39.38. Shares in VLO last traded above $39.38 back on June 10th. The company is scheduled to report third-quarter earnings on October 29th.
